We monitored, and even took notes of, the several Supreme Court oral arguments on the Philippine Health Insurance Corp. (PhilHealth) issue, that because of what the Palace and Congress thought a surplus fund existed, P60 billion was remitted to the National Treasury and the proposed subsidy of P74.43 billion was zeroed out.
Some justices of the High Court illustrated with their own personal experience that no matter how much one makes of PhilHealth’s reserve fund of P600 billion and the reported P150 billion surplus from its 2024 budget, the health corporation, which is funded by members’ contributions, is absolutely short of fulfilling its legal mandate of providing more health cover to more Filipinos. So many out-of-pocket expenses in the hospital have to be paid by members when they get sick. Many kinds of health issues remain outside PhilHealth coverage including procedures and therapies. Those “surplus” funds existed, and continue to exist, because PhilHealth has yet to settle its old and new obligations with both its members and hospitals. The deficit in its delivery to implement the Universal Health Care Act keeps on bloating.
The picture is no different from a man traveling with a full tank of gas, but he has a few thousand kilometers to travel. Even if he goes hybrid, he would still have to plug in, or rely on gas to recharge.
Up to the last of the oral arguments in Baguio City, the National Government insisted to the Supreme Court that the state health insurer enjoyed surplus funds and therefore sequestering P60 billion was more than justified, that the same amount was anyway channeled to health-related public spending.
This could have escaped the attention of the nation previously glued to the PhilHealth controversy for months, but in the 2026 proposed national budget, the Palace and the Department of Budget and Management seemed to have a sudden change of heart. Finance Secretary Ralph Recto himself announced that “in 2026, there is a subsidy for PhilHealth.”
As the media commented, such a subsidy allocation reversed the policy adopted during the finalization of the 2025 budget when the health agency was denied any subsidy. The numbers cited then and today don’t fit in.
PhilHealth’s fund balance is projected at P348 billion by the end of 2025, more than double the level last year, yet the health insurer is deemed entitled to a subsidy? The proposal to restore the subsidy next year is aimed at covering benefit payouts next year and, in the words of the Finance Secretary, “to support an increase of 30% to 50% in benefit packages, broadening coverage and enhancing service delivery across the country.”
What?
We don’t expect to hear mea culpa among policymakers. But no matter how they conceal it, the arguments of the petitioners against the Government and Congress are now being marshalled in support of restoring the subsidy and the higher allocation for the Department of Health. Unwittingly, the respondents are admitting that PhilHealth had no surplus funds, that any reserve balance would have to be used to settle its obligations with its members and partner health institutions, whether public or private, and the universal healthcare system is yet to fully see the light of day. Only a small portion of the population is covered, only a limited range of health problems and procedures could be financed.
On top of these, PhilHealth announced new-found good governance. With the subsidy, there will be no increase in members’ contributions, collections are to be streamlined and strengthened.
Nothing is new here.
As early as eight years ago, the World Health Organization (WHO) spelled out some five strategic priorities for the Philippines in the context of the country’s cooperation with WHO. Priority 1 is to save lives by ensuring a full access to immediate-impact interventions. Priority 2 is the promotion of well-being by empowering people to lead healthy lives and enjoy responsive health services. Priority 3 is health protection through anticipation and mitigation of disasters, and environmental and emerging health threats. Priority 4 is to optimize the health architecture by overcoming fragmentation and achieving universal health coverage. And Priority 5 is to use platforms for health through support in all aspects, settings, policies, and sectors.
These strategic priorities also resonate in various laws and executive orders on the universal healthcare system, and many of the policy implications have been funded by the National Budget. But it took a pandemic in 2020 and 2021 for public spending to start adhering to the constitutional and statutory provisions on the priority that should have been given to the health sector, in the first place.
In 2021 for instance, current health expenditure (CHE) reached P1.09 trillion or some 18.5% higher compared with P917.15 billion in 2020. But then, as reported by the Philippine Statistics Authority, investment or capital formation in health (HK) amounting to P71.15 billion actually declined from P88.54 billion in 2020, or by nearly 20%. Without such investment in health infrastructure, public health would not even be viable.
If not for health spending financed through government schemes and compulsory contributory healthcare financing schemes, public health would have been of arguably poorer quality. All in, they accounted for P546.64 billion or more than half of CHE. Most important, if the public sector is short of what needs to be delivered to the Filipino people in public health, and health insurance schemes are short of what is required, definitely it is the Filipino households who have to pick up the tab.
The last component should be very familiar to us, even to some jurists in the High Court who had to go through medical procedures in the past. Household out-of-pocket payment (OOP) stood at P451 billion — yes, that much. This is not too much of a stretch, but any deficit in budgetary allocation to the health sector, whether to the Department of Health or PhilHealth, will have to be absorbed by the poor Filipino households. Either by way of a bigger out-of-pocket expense, or by denied health services.
For hospitals and other partner health institutions, any unsettled accounts could ultimately lead to their inability to deliver health services to their constituency, or else, they close down.
Talo ang Pilipino! (Filipinos lose!)
It is not therefore surprising that the new head of PhilHealth Edwin Mercado should appeal to the private sector during the weekend “to help address gaps in the country’s healthcare system.” He correctly pointed out that while the demand for health services continues to rise, supply remains so much behind. Mercado is for strengthening primary care to keep members healthy in order to reduce the need for in-patient services.
As we wrote last week, this year’s budget was challenged at the Supreme Court for some unconstitutional provisions put together in an unconstitutional process. It would be difficult for this year’s budget to pass the ideal standard in the allocation of public resources, namely, that it should be “strategic, transparent, accountable, fair, and democratic.” Every peso squandered, or repurposed to serve bad governance, or dedicated to the politics of patronage and corruption is every peso denied an ordinary Filipino in terms of getting good public health or public education.
It’s a good sign that the subsidy to PhilHealth is to be restored and the health sector is to be given a higher allocation in next year’s budget. But like in the theater, we must suspend our applause until the fat lady sings.
Will we ever again see enormous allocations to flood control projects only to be flooded ourselves on the streets or in the privacy of our own homes? Will we ever again see congressional and senatorial allocations of pork while we hear moral praises to the highest? Will we ever again see corruption in the purchase of educational equipment, gadgets and supplies at the Education department while our senior high school students rank lowest in science, reading, and mathematics, and are bottom dwellers in creative thinking? Will we ever again see unconscionable wastage in public resources when they could instead be used to digitalize the delivery of public services and establish greater connectivity in government and industries?
It will be good to hear Senator Risa Hontiveros fiscalize the national budget and Senator Ping Lacson scrutinize each and every allocation in infrastructure, and institutionalize transparency and openness in the bicameral conference on the final shape of the 2026 national budget.
It would be unprecedented if this case of PhilHealth symbolizes a change of heart, or the policy makers are just getting real. Our wish is for the legislature to do its job on the budget while fulfilling their constitutional duty to hear the Articles of Impeachment against the Vice-President. Holding the purse hostage to dispose of the impeachment complaint would indeed be theatrical!
Diwa C. Guinigundo is the former deputy governor for the Monetary and Economics Sector, the Bangko Sentral ng Pilipinas (BSP). He served the BSP for 41 years. In 2001-2003, he was alternate executive director at the International Monetary Fund in Washington, DC. He is the senior pastor of the Fullness of Christ International Ministries in Mandaluyong.
